Auckland's worsening housing affordability could be eased by freeing up more development land, one business leader says.

Connal Townsend, Property Council chief executive, wants a change in policy to allow more sites to be built on.

"I am not in the least surprised that Auckland has slipped to fourth in the ranking," he said referring to the Demographia survey out today.

"For over a decade, we have led a campaign to change the way local government operates in the housing sector. Auckland is still burdened with the poor housing policy decisions affecting land supply that were established well before Auckland Council came into effect.


"These historical policy decisions throttled the supply of developable land both by means of an urban metropolitan limit and generalised public opposition to the provision of greater density," Townsend said.

"Public policy improvements have been achieved under the Auckland Unitary Plan, but the plan is yet to become fully operative and there are some ratepayers still fighting to prevent the adequate provision of housing to meet our city's needs. Some fear apartments going up next to them, some fear urban sprawl and some fear the loss of heritage buildings. While these fears are understandable, this approach will only exacerbate poverty and undermine the opportunities for people wanting to live and work in Auckland."

"Until the property sector gets the green light to provide adequate housing the cost of housing will continue to climb. We don't anticipate any significant improvement in Auckland housing unless supply matches demand."

Satish Ranchhod, Westpac senior economist, blamed a number of factors for the Demographia result.

"Housing affordability is a key concern in our largest city. In earlier years we've had strong population growth, but relatively low levels of home building. That's left us with an underbuild of around 33,000 homes compared to our population. Too address this short fall, we need to be building around 11,000 homes a year.

"And that sort of pace of home construction will need to be sustained for around a decade, if not longer. Currently we're only building around 10,000 homes a year, and the latest dwelling consent figures signal that construction activity has actually been levelling off.

"Population growth in Auckland isn't just because of new migrants. Each year Auckland becomes home to many New Zealanders from other parts of the country. Many New Zealanders who are returning from offshore also settle in Auckland. In all cases, people continue to be attracted to Auckland strong jobs market, particularly in service sectors," Ranchhod said.